After the Election, a New Mandate – and New “Fiscal Cliff” Math

President Obama was reportedly planning to reach out to House Majority Leader John Boehner today to begin negotiating a deal to avoid the so-called “fiscal cliff,” a series of spending cuts and tax hikes that will take effect unless Congress recinds the law that created it. That’s an appropriate and statesmanlike move. The public expects its leaders to work together on important issues.

The question is, what kind of deal? Boehner’s been acting as intransigent as ever, telling Reuters that Congressional Republicans will have “a mandate to not raise taxes.”

Now Boehner’s saying he’s willing to raise “tax revenue,” as long as tax rates are lowered even more. That’s a coded way of saying he wants even more tax breaks for millionaires and billionaires, and that Democrats should expect to get that “revenue” by eliminating tax deductions for struggling middle-class Americans. That’s likely to mean losing deductions for dependent children and mortgages, and tax changes that will lead to even less health coverage for working Americans. He says he’ll also demand gets cuts to Social Security and Medicare as part of any deal.

But Boehner isn’t holding the cards in this situation. The President is. All the numbers say so — in the election results, the polling data, and even in the stock market, if you read it correctly.

The New Math

As the Democrats were fond of saying this year: It’s not politics, it’s math. Here’s some math that Congressional Republicans – and austerity-minded Democrats – are going to have to deal with:

2 to 1: Voters have given Democrats two of three branches of elected government. Two out of three, as they say, ain’t bad. In fact, it’s a mandate to govern. When you’ve only got one out of three branches, you may be a partner in the political process – but you’re the junior partner.

12,744,844: Democratic Senatorial candidates got 12,744,844 more votes than Republicans this year. According to my rough calculations, Democratic candidates got 57.44% of the popular vote. Republicans only got 41.57 percent.

Harry Reid’s been saying all along that he doesn’t want to cut Social Security. The voters agree with him. Deal with it, Republicans.

Zero: That’s the approximate number of candidates whose embrace for the “Simpson Bowles” austerity plan was a pathway to victory. That plan would cut Social Security and Medicare benefits, and sharply cut into all forms of government spending, while lowering taxes even more for millionaires and corporations. It would almost certainly raise taxes sharply, however, for the middle class.

As Zaid Jilani notes, three highly-visible candidates who openly endorsed the Simpson Bowles plan – or who were endorsed by one or both gentlemen themselves – unanimously went down to defeat this week.

On the other hand, Virginia Senate candidate Tim Kaine of Virginia openly rejected the Simpson Bowles plan. He pulled off an upset victory.

303: That’s the number of electoral votes President Obama received. He won a decisive victory around the country – and he won the popular vote, too. You lost, Republicans, fair and square.

And about that whole “fair and square” thing: As the New York Times noted today, the re-election of House Republicans had a lot more to do with gerrymandering, incumbency, and big-money corporate campaign financing than it did with any mandate not to cut taxes.

A headline in the New York Times read, “Question for the Victor: How Far Do You Push?” The answer: As far as the voters have asked you to push.

Inside Job

BBut that process seems to disturb a lot of pundits, press, and political insiders. They’d rather things worked out behind closed doors – “just send your man around to see my man,” as J. P. Morgan suggested to Teddy Roosevelt. The President’s going to be under a lot of pressure to pre-emptively surrender on his stated principles.

Americans for Tax Fairness compiled polling data which showed that 60 percent of voters wanted the Bush tax cuts ended for income of $250,000 and above. Voters said they wanted to see their Social Security and Medicare benefits protected, and the deficit addressed by increasing the rich instead, and they did so by the overwhelming margin of 64 percent to 17 percent. And 62 percent of those polled said that “the message [they] were trying to send to the next president and Congress with [their] votes this year” was: “We should make sure the wealthy start paying their fair share of taxes.”

And yet election-night commentary was filled with talk about the President’s need to find “common ground,” something we never heard about George W. Bush’s two victories – one of which came without either a popular-vote majority or an unequivocal electoral college win. Expect a lot more of this talk from insiders in the days and weeks to come.

These insiders don’t seem to know or care that voters elected the President and his fellow Democrats because of those principles.

Rated X

The morally-compromised “ratings agencies” — actually for-profit corporations that abused their obligations for years, directly contributing to the financial crisis of 2008 — wasted no time getting into the act once the votes were counted. Fitch Ratings immediately warned the President that there would be “no fiscal honeymoon,” saying that a failure to avoid the “fiscal cliff” would cost the US government its “AAA” rating.

But international investors still love our government. They’re essentially paying our Treasury to borrow money. And despite what the fearmongers are saying, the stock market didn’t plunge because they’re afraid we won’t cut spending. While it’s true that markets dislike uncertainty, what they really are hate austerity measures that shrink the economy.

Despite the mythology, the stock market didn’t fall the last time credit agencies frowned on the the government’s credit. It was the deal itself that dealt it a blow:

You can see that the market began to fall in anticipation of a deficit deal, and fell even further when the deal was done. But it shrugged off a downgrade by S&P, another ratings agency, and even climbed slightly. Why? Because investors know that spending cuts in this economic climate are recipe for disaster.

And after all those “agencies” gave all worthless mortgage securities a “AAA” rating, apparently investors don’t rate them very highly.

Stepping Up

At times during his first term the President appeared to show disdain for ideology, for advocacy, for the conflicts that are part of the political process. He sometimes spoke of emulating the compromises reached between Ronald Reagan and House Majority Leader Tip O’Neill, but without offering the fierce advocacy each of those leaders first gave for his own viewpoint.

But it was a newly energized President who addressed supporters on Election Night, saying “We will disagree, sometimes fiercely, about how to get there.”

“I’m not talking about blind optimism,” President Obama told the cheering Chicago crowd. “I’m not talking about the wishful idealism that allows us to just sit on the sidelines or shirk from a fight.”

That’s the process the public needs to see – the disagreement, the debate, and the conflict, as well as the compromise and the forging of consensus. Voters need to know why they’re getting the policies that affect them, and which politicians are pulling for (or against) them.

That’s a promising sign. The absence of disagreement and ferocity has sometimes robbed the public of the opportunity to make informed choices in the voting booth. Would voters have given the reins of power back to Boehner and Congressional Republicans if they’d been able to see just how extreme their positions have been for the last two years?

The voters have asked President Obama and his fellow Democrats not to “shirk a fight” over economic issues. We look forward to seeing the democratic process unfold over the coming weeks, months, and years, as a much-needed fight against economic injustice is played out in the public arena.